Time’s October 5, 2009 cover story tells the history of one shrinking city (Detroit). This story highlights the importance of shrinking cities as a local, state, and federal policy issue. Time’s viewpoint is simple; it is that a certain number of large events caused the demise of an American manufacturing and economic power house. These events can be summarized as the following:

White Flight. The article highlights that prior to the July 1967 riots racial tensions existed; however, “black people in Detroit, enlightened whites believed, had jobs and homes, and even if those homes were on the other side of an apartheid wall their owners had a stake in the city.”

Dissimilarity Index. In 1970 (Tri-County Area), the dissimilarity index, which measures black/white racial segregation was 0.892, in 2000 the index was 0.853. Between 1970 and 2000 the index only decreased by 0.039. This shows a continued and high trend of racial segregation in the Tri-County Area. The dissimilarity index measures from 0 (lowest) to 1.0 (highest). The index can be interpreted as the percentage of one of the two groups that would have to move to a different geographic area in order to produce a completely even distribution.

Lack of Visionary Leadership. Mayor Young was elected in 1973 as Detroit became a majority-black city. Violent crime soared, the school system started to “cave in on itself”, the Mayor didn’t attract and retain new businesses, and arson was common. The Time article put it well by stating “Detroit was dying, and its mayor chose to preside over the funeral rather than find a way to work with the suburban and state officials who now detested him every bit as much as he had demonized them.”

Car Crash. The one industry that Detroit relied on, failed them. The industry was no longer profitable and political pandering (John D Dingell refusing to support more stringent mileage standards) allowed the foreign competition to produce better and more innovative cars than Detroit.

One pattern of Detroit’s history that stands out to me is the reliance or conservative methods of handling systematic problems, such as racial segregation, lack of economic diversity, and social problems. From 1973-1993, which are years that Detroit witnessed shrinking, white flight, crime, and school problems the same mayor stayed in office and had no effective programs that reinvented the dying city.

One question while reading this article is how Detroit has faired in terms of a segregated black/white population. It appears that Detroit made little progress since 1960’s. So how does the City of Detroit (not including the suburbs) fair in terms of its dissimilarity index? It appears that Detroit is the most racially segregated city (large) in America. The index is even higher than small areas, such as Gary, IN.

To me this shows that Detroit needs an aggressive plan of action that focuses on just more than urban renewal. Social and economic characteristics must improve for Detroit to be America’s “Come-back City”. But, how does a cash strapped City (Detroit’s treasury is $300 million short to provide basic services) with a 28.9% unemployment rate start to recover or at least stabilize?

First, it needs to realize that the city’s footprint needs to shrink or at least be “right-sized”. The Time article stated “Detroit has to shrink its footprint, even if it means condemning decent houses in the gap toothed areas and moving their occupants to compact neighborhoods where they might find a modicum of security and services.”

Second, Detroit needs to focus on improving social and economic conditions. This can be started by “right-sizing” the City. Next, a focus may be taken to create and implement plans to improve certain properties (maybe urban agriculture, bike lanes, etc). This focus should then be shifted to education and policing, coupled with strong economic development activities.

None of the ideas above are new and the essential question is where will the money come from to complete these activities? Well, it is interesting to me that the Federal government invested $81 billion in Detroit’s two biggest companies, Chrysler and GM. The federal government cited that nationwide systemic problems would result if the auto industry crashed. Certain people have speculated that some of that money will never be recovered. So, I ask the question in situations where it is near impossible for cities to turn around immediately when should the federal government start “investing” in shrinking rust-belt cities?

Personally, I believe that the parallels between TARP money being invested in the auto industry and federal dollars being invested in Detroit are similar. However, why should the federal government bail out a city? Because, the city can shape and influence the economics of a large area and has the potential to create enough tax benefits to actually have a return on investment (of course, the plan must work).

The auto bailout mandated that GM and Chrysler “reinvent” themselves. That they become profitable by shedding non-profitable business units and “right-sizing” their workforce and companies. This is the same challenge that Detroit faces, but in terms of a government and these problems affect the entire Country. So, the question becomes when and how will Detroit get the help that it needs and deserves?